First Principles of Business Law

5. Protection against unfair business practices

5.6. Wrongly accepting payment for goods

A owns a shop in Sydney that sells skiing equipment. In summer, business is very slow and A never misses an opportunity to make a sale. One day B, who is going on a skiing holiday in Europe, comes into A's shop and asks for an 'Everest' ski suit. This is a top quality but very reasonably priced item. A tells B that he does not have an 'Everest' ski suit in the shop but that he might have one in his warehouse. If not, A says, he can get one from the manufacturer. In fact, A knows that he has no 'Everest' ski suits in his warehouse and the manufacturer has told him that they are no longer available. However, A thinks that once B has ordered and paid for the 'Everest' ski suit, B will have no choice but to accept a lower quality suit in substitution. A asks B for $550.00 for the 'Everest' ski suit and B pays him.

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(a) By accepting payment for an 'Everest' ski suit that he has no intention of supplying, and because the substitute suits that are available at that price are inferior in quality and unlikely to be acceptable to B, A is breaching the provisions of the ACL.

(b) Even though he knows that he cannot supply the 'Everest' ski suit that B is paying for, A is not breaching the provisions of the ACL because he will be able to supply some other brand of ski suit for the same price, even if the substitute suit is of a lower quality.